Did CFPB's Cordray fake out Trump and GOP?

Despite months of fevered speculation and analysis about Richard Cordray's future, including whether he would be fired by President Trump or choose to quit to run for governor of Ohio, he remains in a somewhat surprising place — the director of the Consumer Financial Protection Bureau.

The Trump administration appears unwilling to oust Cordray even after renewed pleas by top Republicans last week, and Cordray himself has given no sign if he intends to leave. With a Feb. 1 filing deadline fast approaching, some political observers are questioning whether Cordray plans to depart after all.

"As a practical matter, the likelihood that Cordray will declare his candidacy has to be seen as decreasing as time progresses," said Benjamin Saul, a partner at White & Case. "It may point to his willingness to ride out his term."

Some analysts argue that President Trump is waiting for a court decision in a case on the CFPB's constitutionality before deciding whether to fire Director Richard Cordray.
Bloomberg News

Following is a guide to how Cordray's tenure at the CFPB could play out:

Did Cordray fake out Trump and the GOP?

If Cordray does not leave soon — as has been widely expected — it may be that he has played on his possible political aspirations in order to keep Trump from firing him.

When Trump took office, few expected Cordray to still be at the job 10 months later. But the president and his advisers appeared reluctant to fire the CFPB director for fear of helping his potential candidacy and enraging consumer groups. That reluctance hasn't abated.

According to a report last week, Trump polled Republicans at a signing ceremony overturning the CFPB's arbitration rule, asking what he should do about the agency's director. The response was mixed, according to the story, because some feared it would only help Cordray if he were ousted.

If Trump fires Cordray, that would turn him into a martyr and potentially hand him the governorship of Ohio, some attorneys say.

Trump first raised concerns about Cordray at a meeting of community bankers in March. At the time, Gary Cohn, the White House's chief economic adviser, suggested Cordray could depart voluntarily to run for office in his home state, according to participants at the meeting.

If Cordray does not leave, it could mean he was still deciding about whether to run for Ohio governor and opted against the move. Alternatively, it might mean he was aware that having a potential run in the background helped ensure the administration did not move against him.

A court ruling is still possible

The Trump administration may also be waiting for a ruling in the court case PHH Corp. v. CFPB. A three-judge panel ruled last year that the CFPB director could be fired at will, striking the Dodd-Frank Act's conditions that he or she could only be terminated for "inefficiency, neglect of duty or malfeasance."

But the CFPB successfully appealed that decision to the full D.C. Court of Appeals, which threw out the earlier decision and agreed to review the case. A decision is expected soon, possibly by the end of the year.

"Trump is waiting for the en banc decision in PHH," said Richard Gottlieb, a partner at Manatt, Phelps & Phelps. "Firing Cordray would lead to a potential CFPB challenge because the bureau could theoretically ignore the order absent cause for the termination."

If the court rules against the CFPB, it's possible Cordray would choose to depart on his own.

Even if he doesn't, a decision against the CFPB would likely spur Trump to act.

“There has been speculation for some time over whether President Trump would decide to remove Director Cordray from office," said Don Lampe, an attorney at Morrison & Foerster. "A ruling of unconstitutionality in the PHH case could give the president political cover to take that action.”

If Cordray leaves, what's next?

Cordray's term expires in July 2018. If he leaves early or at that time, he would be automatically succeeded by the agency's acting deputy director, David Silberman.

"The industry would push back against Silberman maintaining the reins," said Isaac Boltansky, an analyst at Compass Point Research & Trading.

Because the Vacancies Act puts some limits on whom the administration can appoint, one option would be for Trump to pick someone who has already been confirmed by the Senate. Interestingly, a way around the issue would be for Trump to name Treasury Secretary Steven Mnuchin.

Boltansky argues that Trump will name Mnuchin as a placeholder, allowing Mnuchin to designate someone at Treasury as a "special government employee" to sidestep congressional vetting and ethics rules. That same tactic was used to name Keith Noreika, the acting head of the Comptroller of the Currency.

The names being floated to run the CFPB on an interim basis include Craig Phillips, a counselor to the Treasury secretary, who had been a managing director and member of the operating committee at the asset manager BlackRock; and Jared Sawyer, a deputy assistant secretary of financial institutions policy at Treasury, who had been a special counsel to Senate Banking Committee Chairman Mike Crapo, R-Idaho.

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